Arbitration Showdown

Mock Hearing: Chase Headley

It's salary arbitration season in Major League Baseball, and here at Baseball Prospectus we're holding mock hearings, arguing for or against the actual team/player filing figures before a three-person panel of certified arbitrators. We've selected 10 of this winter's most intriguing, highest-dollar cases to cover in depth over the first two weeks of February (regardless of whether the players' real-life cases remain unsettled). After each side's opening argument and rebuttal/summation below, we'll give you a chance to vote on what you think the result should be before seeing the panel's decision. For more on the arbitration process, read the series intro by Atlanta Braves Assistant GM John Coppolella, listen to his appearance on Episode 35 of Up and In, or check out the BP Basics introduction to arbitration.

In Part One of this 10-part series, we'll tackle San Diego Padres third baseman Chase Headley, who (unbeknownst to our arbitrators) settled with San Diego for $8.575 million last week.

The criteria will be the quality of the Player’s contribution to his Club during the past season (including but not limited to his overall performance, special qualities of leadership and public appeal), the length and consistency of his career contribution, the record of the Player’s past compensation, comparative baseball salaries, the existence of any physical or mental defects on the part of the Player, and the recent performance record of the Club including but not limited to its League standing and attendance as an indication of public acceptance.

The complete procedure for salary arbitration is available in the Basic Agreement.

Since Petco Park opened in San Diego in 2004, not one Padre before 2012 had led the National League in a major offensive category in a season: not runs or RBIs, not home runs or doubles, not batting average or hits, not on-base or slugging percentage. The cavernous park and damp seaside air simply punish the batters who call Petco home. Since 2010, the National League has scored nearly 20 percent more runs away from Petco Park than at Petco Park.

Trying to lead the league in an offensive category at Petco is like giving everybody else a one-month head start.

Last season, though, Chase Headley did what no Padre had. He led the National League in runs batted in, while also leading all NL third basemen in home runs, runs scored, and games played. That he did it in the offense-strangling environment of Petco puts his performance among the best by a third baseman in the past decade.

Headley’s performance is similar to that of another third baseman who emerged recently as a superstar. Before 2011, the Blue Jays’ Jose Bautista had five years of major-league service time.

Such a comparison, already flattering to Headley, doesn’t account for the obstacles of hitting in Petco Park. No team would try to deny the effects of such a park; they are a basic and accepted part of any player evaluation. Remove the distorting bias of the ballpark and focus on each player’s performance on the road, where Bautista and Headley can be compared on an even field:

Player

Platform Year

Games Played

AVG

HR

RBI

OBP

SLG

OPS

Jose Bautista

2010

83

0.241

21

55

0.347

0.515

0.862

Chase Headley

2012

80

0.300

18

64

0.395

0.541

0.930

Headley was substantially better in visiting parks in his breakout 2012 season than Bautista was in his breakout 2010 season.

Headley strengthens his case with the timeliness of his hitting. In 2010, Bautista drove in 19.1 percent of the runners that were on base for him, an elite rate and the seventh-best in baseball that season. In 2012, Headley was even better: he drove in 19.9 percent of runners.

And Headley is the better defensive third baseman. Bautista’s play forced the Blue Jays to move him to the less-demanding position of right field. Headley had the second-best fielding percentage among all third basemen in 2012, and he won the National League Gold Glove at third base.

Player

Platform Year salary

PY+1 Salary

PY+1 Raise

Jose Bautista

$2.4 million

$8 million

$5.6 million

Chase Headley

$3.475 million

?

?

Bautista got a $5.6 million raise as part of a negotiated long-term contract. A similar raise for Headley would put him over $9 million, and on the higher side of the two figures submitted to the arbitration panel. Other middle-of-the-order hitters in recent years have received similar raises with similar service time as part of negotiated deals:

It's not easy to find players comparable to Headley; few players are as productive at such a premium position. Over the past five seasons, just six players have driven in 110 runs and slugged 30 home runs while playing third base regularly. It's an elite group: Alex Rodriguez, David Wright, Evan Longoria, Miguel Cabrera, and Bautista and Headley. Headley deserves to be paid like the others in that group, and he deserves a raise comparable to Bautista's after 2010. —Sam Miller

Club's Presentation

It would test the patience of this panel for the Club to claim that Chase Headley did not have a good 2012 season. Headley's requested salary, however, should similarly test the panel's patience: over $10 million is an extraordinary amount for a player in his position. No third baseman with Headley's service time in the last six seasons has been paid a salary as high as Headley's request. Indeed, none of them has even been paid more than the $8.6 million midpoint.

Thus, the arbitrators should award Headley this extraordinary salary only if he is an extraordinary player. Unfortunately for all involved, Headley is not extraordinary. Despite leading the league in runs batted in, he finished only fifth in the Most Valuable Player Award voting (his first time receiving votes). More importantly, he was unable to keep the Club out of the doldrums. The Padres finished fourth in their division, 18 games out of first place, and never spent a day with a winning record. Headley also does not draw fans to the park, as the team finished last in its division in average attendance and 21st overall in baseball.

Further, Headley's year, as good as it was, was also likely a one-time event rather than a sign of things to come. From 2009 to 2011, a three-year span in which he played 430 games, Headley hit 27 home runs. Suddenly, in 2012, he hit 31. The website HitTrackerOnline records data about all home runs hit. The home runs are rated on a scale from "no doubt" to "just enough," based on how far past the fence they flew. Eleven of Headley's homers, more than a third of his total, were rated as "just enough," tied for third in the National League. Three of those 11 were given the tag "lucky," meaning that without weather effects, they would not have been home runs. Headley is thus at least inconsistent in his home-run hitting (the major factor in his leap forward in 2012) and at worst a mirage.

Headley also shows signs of decline on defense. Both Defensive Runs Saved and Ultimate Zone Rating ("UZR”), systems that measure a fielder against his peers while adjusting for the difficulty of opportunities he faces, show that Headley is not the defender he was in 2010. Indeed, DRS rates him below-average overall, and most of his positive UZR is attributable to avoiding errors, a skill that again may well be a fluke given that he has never shown it before.

Headley enjoyed an excellent 2012, but as he will be 29 in 2013 (an age at which many players begin to decline) and cannot be expected to repeat his 2012 season in important ways. As he cannot show himself to be an extraordinary player, but merely a good one, the panel should not grant him an extraordinary salary. —Jason Wojciechowski

Player's Rebuttal/Summation

It is interesting that the Club says in its presentation that “the arbitrators should award Headley this extraordinary salary only if he is an extraordinary player.” Headley’s extraordinariness shows in his 2012 statistics, but it also shows in his manager’s own words:

I heard that he was named one of the most underrated players in baseball. I think that’s right … That was sort of borne out by the number of teams that were talking about him at the trade deadline. You hear a lot of high praise for the Albert Pujolses of the world, those type of guys. I would suspect that in team meetings, in pitcher-catcher meetings, he gets a lot of conversation. —Bud Black, 08/13/2012

The Club’s position that “no third baseman with Headley's service time in the last six seasons has been paid a salary as high as Headley's request” is disingenuous at best. Headley has four years of service time, but he was a Super Two player, which makes this his third arbitration-eligible offseason. That requires that he be compared to players who will, in most cases, have five years of service time. Headley's salary demands are far from unusual for a player with five years of service time.

The two most similar to him statistically—which is to say, the two other elite third basemen in the National League—are Ryan Zimmerman and David Wright:

Player

Platform Year

AVG

HR

RBI

SB

PY+1 Salary

David Wright

2009

0.307

10

72

27

$10.25 million

Ryan Zimmerman

2010

0.307

25

85

4

$9.025 million

Chase Headley

2012

0.286

31

115

17

??

It is certainly tricky to compare salaries that were negotiated years ahead of time as part of much larger, longer contracts, but these comparisons at the very least disprove the Club’s contention. Headley’s service time, as a former Super Two in his third year of arbitration eligibility, actually places his salary request squarely among those of the National League’s best third basemen at similar stages in their careers.

The Club suggests Headley was lucky because 11 of his home runs cleared the fences by “just enough,” but that point strengthens the Player’s argument that his home ballpark is an obstacle. The home run-tracking website cited by the club also lists, for each home run, whether it would have been a home run in the league’s other ballparks. Here is how each of the 11 “just enough” home runs would have done elsewhere:

Most of the home runs that the Club claims were “lucky” would have been out of nearly every ballpark in baseball. With the Padres planning to bring Petco’s fences in this year, those “just enough” home runs might disappear, all right. They’ll just now be “no doubt” home runs.

Finally, it is laughable that the Club would disparage Chase Headley’s defense using contradictory and counterintuitive measures found on the Internet (one of which, it should be noted, actually grades Headley very highly!). Headley committed just 10 errors in 2012. He won the Gold Glove, the highest award possible for a fielder and a seal of approval by the league’s managers and coaches. Defensive metrics are a dime a dozen; there's at least one out there that will say whatever one wants it to say. But Headley's fielding percentage, and Headley's Gold Glove, are facts. If the Club wants to argue that the highest defensive honor in baseball is irrelevant, it is clearly struggling with the weight of evidence against it. —Sam Miller

Club's Rebuttal/Summation

The three supposedly comparable players that the Player raises have one notable factor in common: recognition by the baseball community of their extraordinary ability. Through 2010, Prince Fielder made two All-Star games and finished in the top four in the MVP voting twice. In 2010, Jose Bautista made the All-Star Game and finished fourth in the MVP voting. And through 2011, Josh Hamilton made four All-Star Games and won an MVP. Chase Headley has not made a single All-Star Game.

One significant reason why Headley was not chosen for the Midsummer Classic in 2012 is that the vast majority of his production occurred after July. From August 1 through the end of the season, Headley batted .318 with a .632 slugging percentage. Before August 1, he hit only .268 with a .422 slugging percentage. A whopping 63 of his RBI (54 percent) came in the final one-third of the season. For a team in the pennant race, this would be a good thing, but heading into August, the Padres were 44–61 and 13 games out of first place. Baseball Prospectus's sophisticated simulations gave the Padres a zero percent chance of making the playoffs at the time. Headley did the vast majority of his damage long after the games ceased to have any importance in the standings.

Relatedly, all but one of the players listed in the Player's brief have led their teams to the playoffs or even World Series championships, while Headley has never played in the postseason. Headley's individual production is fine, assuming it holds up in 2013, but baseball teams have to win, and Headley has not yet shown that he can make that happen.

The Club's offer represents a significant raise, but the Player has not demonstrated that he is so extraordinary as to deserve a near-tripling of his salary. —Jason Wojciechowski

The Reader Poll

Before scrolling down to read the three-person panel’s decision, record your own decision here:

Burt Fendelman is an attorney with more than 45 years of experience, initially in corporate finance and securities laws working as inside counsel for several major securities brokerage firms. He has performed as an arbitrator for FINRA (Financial Industry Regulatory Authority), the American Arbitration Association, and currently as an arbitrator and mediator for the New York County Lawyers Association in fee dispute-related matters. He is presently a self-described “work in progress”, working with clients in areas related to art and antiques. He attended Washington University in St. Louis and NYU Graduate School of Tax Law, and he now lives in Manhattan.

Doris Lindbergh is a retired lawyer who is an arbitrator with FINRA (Financial Industry Regulatory Authority) and its predecessor forums, the National Association of Securities Dealers (NASD) and the New York Stock Exchange. She also arbitrates for the National Futures Association (NFA). She attended Washington University School of Law and has a Master of Arts from Fordham University. Her employment history includes stints at Wall Street investment banks and, most recently, the MTA New York City Transit Authority, but her most challenging assignment was raising a future Editor-in-Chief of Baseball Prospectus.

David Marcus is a retired lawyer and serves as an arbitrator with the Financial Advisory Regulatory Authority (FINRA). He lives in Metuchen, New Jersey. He attended Columbia College and Yale Law School, after which he served as an enforcement attorney with the SEC. His subsequent career includes working for the New York Stock Exchange heading its regulatory division, and working for several broker-dealers as a regulatory attorney or General Counsel.

The Panel’s Decision

3-0 in favor of the Club

We read, considered, and conferred. We decided unanimously in favor of the Club. Although Mr. Headley excelled toward the end of last season, prior to that, in both 2012 and previous seasons, he was an average player. Therefore, the Club's offer to more than double his salary recognizes his achievement last year, and is fair.

The Sabermetric Perspective/Additional Commentary

As John Coppolella wrote in his Arbitration Showdownintroduction, real-life “hearings are held in front of three arbitrators, lawyers who usually have little baseball experience or background.” The same is mostly true of today’s mock hearing (sorry, Mom). In a real hearing, each side has two hours, all told, to present its case, rebut its opponent’s, and deliver a summation. With time at a premium and clarity of the utmost importance in persuading the panel, it’s risky to spend much time explaining complex sabermetric concepts in order to communicate your case. For that reason, the statistics cited in salary arbitration tend to be more simplistic and traditional than those found in the typical player evaluation piece at Baseball Prospectus, which is why you saw all those mentions of Batting Average and RBI above.

Since this is BP, we’ve set aside some space for a short section at the end of each hearing to present the sabermetric perspective that might have been missing from the mock hearing itself. In this instance, there’s not much to add: while a more sabermetric-minded argument might have mentioned that Headley had the fourth-highest TAv in the NL (.324) despite his somewhat underwhelming slash stats, the Player’s case did convey the impact of Petco Park on Headley’s offensive statistics (though it didn't play up the mechanical tweaks that could have enabled him to add power). The Club side could have used Headley’s -16.3 FRAA over the past two seasons (-26.9 career) or his -2.4 BRR in 2012 (the third-worst total on the Padres) to argue that he’d lost a step, but as it turned out, the Club didn’t need any extra help.

However, there is one unusual feature of the case presented above: the Club’s contention that Headley is “not extraordinary.” The Player’s rebuttal addressed the substance of this claim, but the language itself is more inflammatory than one would expect to encounter in an actual hearing. Regardless of whether the claim that Headley isn’t extraordinary would help or hurt the Club’s case, it could have significant consequences outside of the hearing room.

Players usually attend their own arb hearings, which is one reason why teams try to settle before those hearings are scheduled: it’s usually not in their best interests to make their players mad. Although the two sides couldn’t come to an agreement on a long-term extension this offseason, the Padres are reportedly interested in pursuing one, so it might not make sense for them to alienate their franchise player by downplaying his performance in a career year, even if it could potentially lead to short-term savings. San Diego would also have to consider the possibility that Headley would tell his teammates about the team’s hostile arbitration tactics, which wouldn’t improve the mood in the clubhouse or make players more inclined to re-sign with San Diego.

An alternative to “not extraordinary” that’s more likely to be mentioned in an actual hearing is “not decorated.” As the Club’s case above points out, Headley has yet to make an All-Star team or win an MVP Award; “not decorated,” a phrase often heard in arbitration, is a more tactful way of drawing attention to his lack of career accolades. While one’s extraordinariness can be debated, the contents of one’s trophy cases can’t. —Ben Lindbergh

Great article. Really interesting. I sided with Headley in the simple Club/player choice in the survey but in reality I do think the midpoint is the best option. As that is what they have agreed to in real life I think that they have come to the correct decision.

Without being able to speak to how arbitrators perceive such arguments, the last line of the relevant paragraph in the CBA refers to "and the recent performance record of the Club including but not limited to its League standing and attendance as an indication of public acceptance."

Given its placement in that paragraph and the fact that a player is just a tiny percentage of his team, I would hope, as a sabermetrically minded person, that such arguments are not accorded heavy weight, but, from my perspective, because of Headley's massive platform season and the fact that the Padres did not fare impressively either in attendance or record, I felt it was a strong enough piece to make it into my 800 words.

The problem with using Ellsbury, I think, is that he plays a completely different position. I don't recall if that's against the rules, but if the job is find comparables, going away from the most easily compared item is probably not a good idea.

Now, if the argument is there are almost no comparables for whatever reason, I think using Ellsbury is fine. IIRC, Tim Lincecum, fresh off a Cy Young Award, relied on a raise Ryan Howard received in arbitration after Howard won the MVP. I imagine those are rarely used arguments, though.

* The point Ben raises about not trashing the player too much is well-taken. I took the tack of attempting to write a winning brief and damn the torpedoes. For a real team, of course, it's torpedoes all the way down.

* This was hard. Maybe it would be a little easier if I had 12 pages and four months and a staff of research monkeys to deal with it rather than 800 words and a few stolen nights, but maybe not -- after all, I wanted to win and there are both personal and institutional reputational concerns associated with my doing a good, not-slapdash job, but teams and players need to win because they're playing for millions of dollars.

Great article. What I'd love even more is a retrospective reporting of actual hearings. I don't know the extent to which they are governed by confidentiality agreements, but hearing a rep from the club actually explain their arguments for a specific player, and that player or his reps describing the counter (and any emotions generated from the hearing) would be fascinating and help get at how a club can effectively disparage a player while still maintaining a productive relationship.

Hopefully arbitration has been around long enough that a retired player might be willing to do this?

If hockey can be used as an example (the NHL also has a similar arbitration process in place) it can be rough. There are well-documented cases of players leaving the hearing in tears and trades occurring shortly thereafter. As Mr. Coppolella noted, in most cases after going to the panel, the player and team part ways within three years.

I've been trying to understand more and more about baseball the past two seasons. This was an area I always heard on the radio but never really grasped it. This article sent me into your archive and really get a little dirty trying to figure out all your discussions.

I learned a lot from it and I really liked the conclusion section. I'm also a Padre fan and there is so little written about them that was also fun to read.